Federal Government, RBA And APRA "Supporting The Flow Of Credit" - Key Points For Business And Investors

22 March 2020

Late last week the government and regulatory bodies announced they have taken coordinated action to ensure the flow of credit in the Australian economy.

The key points for business and investors were:

  1. The Federal Government will provide a guarantee of 50% to SME lenders in support of new short-term loans to SME’s to a limit of $40B in new lending.  The loans will be up to a 3 year term, with no repayments for the first 6 months and will be unsecured (so will not require assets for security).  The expectation is that lenders will look beyond the next 6 months in their assessment.  The scheme will be available by early April and will run through until 30 September 2020.  No list of participating lenders has yet been published.
  2. In conjunction with this $250k loan scheme lenders will be exempt from the responsible lending obligations for 6 months for existing customers.  The exemption applies to any credit for business purposes.
  3. The RBA has announced a funding facility for the banking system to assist in driving down the cost of credit.
  4. For smaller lenders, the Australian Office of Financial Management will provide $15B in structured finance to this market.

In addition, further to our e-Alert last Friday regarding the ABA relief to Small Businesses, we have seen a number of banks publish their response.  We have only researched the major banks but please contact your lender if they aren’t one of those listed below:

National Australia Bank

Westpac Bank

ANZ Bank 

Commonwealth Bank

We will send through further updates as they become available.

For more information please contact your local Boyce Accountant.

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